While most companies are busy inflating their paid social media budgets or expanding their video personnel, precious few are focused of the simple power of something less expensive, more personal, and typically more effective: word of mouth.

Some of the most successful companies have realized the most potent way to promote their brands doesn’t come with a big price tag; they rely instead on creating customer chatter. The amazing thing about word of mouth is that it influences 59-91% of all purchases, yet NOBODY has a strategy for it.

You have a marketing strategy. A digital strategy. A social media strategy. A PR strategy. But you don’t have a word of mouth strategy. We just take it for granted that our customers will talk about us. But is word of mouth marketing really worth it?

Consider the numbers. According to Ted Wright, CEO of Fizz, word of mouth can spread from one excited customer to 40,370 people in only a year’s time.

• Nielsen report that 92% of consumers believe suggestions from friends and family more than advertising.
• Beyond friends and family, 88% of people trust online reviews written by other consumers as much as they trust recommendations from personal contacts.
• And 74% of consumers identify word of mouth as a key influencer in their purchasing decisions.
• But only 33% of businesses are actively seeking out and collecting reviews.
• Despite that fact that a little, can do a lot. When specific case studies were analyzed, researchers found a 10% increase in word-of-mouth (off and online) translated into a sales lifts between 0.2 – 1.5%.

That’s a tremendous wave that turns your customers into volunteer marketers, using their reach and relationships to get you, new customers, at nearly no cost.

• What Does Word of Mouth Mean in Marketing?
• How Does Word of Mouth Work?
• Pros & Cons of Word of Mouth Marketing
• What Companies Use Word of Mouth Marketing?
• How to Take Advantage of Word of Mouth to Grow Your Business Revenue
• Is Word of Mouth The Best Form of Marketing?
• How do You Promote You Business on Word of Mouth?
• Word of Mouth Marketing Definition
• Word of Mouth Marketing Examples
• Word of Mouth Marketing Statistics
• Word of Mouth Advertising
• Word of Mouth Marketing Strategy
• Benefits of Word of Mouth Marketing
• How Does Word of Mouth Help Businesses?
• How Does Word of Mouth Affect Marketing Success?
• How Can Word of Mouth be Used to Improve Sales?
• Which is More Effective in Marketing Word of Mouth or Advertising?
• Why is Word of Mouth so Powerful?
• What is Word of Mouth Communication in Marketing?
• What Word-of-Mouth Techniques Are Effective?
• How Much of Business is Word of Mouth?
• How do You Leverage Word of Mouth?
• Why is Word of Mouth so Important For Marketers?

What Does Word of Mouth Mean in Marketing?

Word-of-mouth marketing (WOM marketing) is when a consumer’s interest in a company’s product or service is reflected in their daily dialogues. Essentially, is it is free advertising triggered by customer experiences—and usually, something that goes beyond what they expected.

Read Also: How to Become a Digital Marketing Analyst

Word-of-mouth marketing can be encouraged through different publicity activities set up by companies, or by having opportunities to encourage consumer-to-consumer and consumer-to-marketer communications.

Also called referred to as “WOMM” or “word-of-mouth advertising,” WOM marketing includes buzz, viral, blog, emotional, and social media marketing.

How Does Word of Mouth Work?

Word-of-mouth marketing differs from natural word-of-mouth references to a company’s products and services in how it may come as the result of a promotion, encouragement, or other influence by a company, otherwise known as “seeding.”

When a diner has a wonderful time at a restaurant because their expectations were exceeded and later tells tweets about it, or when someone had a great experience using a product in a new way and tells everyone they know about it, those are examples of word-of-mouth marketing.

Also, word-of-mouth marketing does not stop at the first interaction; it tends to lead to a cascade of follow-on interactions.

The encouragement on the part of a company may take one of several forms. The best way is to give them a reason to talk, such as exceeding expectations or providing insider skills or information about a product.

Other strategies include offering consumers new ways to share information about a company’s products and services, and engaging and interacting with the consumer, such as through exemplary customer service. This is especially valuable with social media-based customer service, which provides for seamless sharing and promotion.

Pros & Cons of Word of Mouth Marketing

Much of this communication takes place informally as family and friends share their experiences with your company in conversation. However, companies can become more assertive about finding satisfied customers and promoting referral opportunities if they get others to buy.

Word of mouth marketing has several potential benefits and drawbacks for businesses.

Pros

Credibility

A major advantage of word of mouth compared with paid for messages is its credibility factor. When people hear messages about your company, products and services from someone they trust, they are more likely to believe them.

When you pay for marketing messages, you customers, expect you are only going to say positive things to get customers to buy. This is why customer satisfaction is so important. Not only do you retain customers, but you also give them more positive ammunition to attract other people to your business.

Word of mouth marketing is effective at getting new consumers to try products and services, as people trust friends and family members more than they might trust businesses.

Traditional advertisements work on the principle of reaching as many potential customers as possible in the hopes that a few will be intrigued and try the advertised products.

By contrast, a single satisfied customer might only tell a few close friends about a positive experience with a business, but a strong recommendation from a friend is more likely than an advertisement to make a lasting positive impression.

Low Cost

In theory, word-of-mouth marketing has no direct cost. It is simply the interaction of customers in the marketplace who share their experiences. However, the investments you make in hiring, training and motivating service employees are indirectly tied to word of mouth.

You essentially pay to deliver to customers experiences they want to brag about. These costs are still modest compared with money spent on mass media campaigns, especially those involving TV ads.

Word of mouth marketing can provide additional sales, even if a company doesn’t spend money on advertising. It’s especially useful for small and local businesses, which may have limited advertising budgets.

Cons

Control

One drawback of word of mouth marketing is that businesses have little control over when and how it occurs. Lack of control makes it difficult for a company to increase word of mouth marketing: Customers are free to choose whether they tell friends and family about their experiences.

And word of mouth marketing is not always positive. Customers with bad experiences can spread negative sentiments about businesses that can discourage potential customers from trying goods and services.

Expectations

Word of mouth marketing can give consumers expectations about products that may be difficult to meet. A highly positive recommendation from a friend might persuade a consumer to try a product, but if the product doesn’t live up to his expectations, he may be disappointed.

Consumers with no prior knowledge of a company and no expectations are more likely to be satisfied when they try new products or services than those coming in with unrealistically high expectations.

What Companies Use Word of Mouth Marketing?

In the past, businesses had little power to tap into word-of-mouth activity. But the rise of social media and influencer marketing is making it easier to motivate followers into action.

If you are looking for smart ways to leverage your audience, check out how top brands get customers talking with these brilliant word-of-mouth marketing examples.

Pinterest

Pinterest thrives on user-generated content. The company depends on users to create vision boards and actively recruit more “pinners” into the fold. So, how did Pinterest go from 3000 followers in early 2010 to over 200 million in 2018?

Founder Ben Silbermann turned to the site’s small, but passionate, audience to plan a growth campaign. The site’s loyal group of users really loved the product, so Silbermann organized meetups with them to get feedback. Connecting one-on-one showed users the Pinterest team was serious about building a better site and a bigger community.

Pinterest used this gateway to run one of the most successful referral programs of all time. The “Pin It Forward” campaign encouraged users to create pinboards and invite their friends to do the same. Striking visuals provided inspiration for people to join and offered a preview of exciting projects they could try.

Threadless

Growing a community is an invaluable way to gain insight about your audience while grooming brand advocates. T-shirt company Threadless did just that by gathering graphic designers and art fans to create, share, and buy custom products.

The company attracted 10,000 members in its first two years and earned $6.5 million in under four years. The company engaged fans with ongoing contests and challenges that helped designers gain notoriety and sharpen their skills.

The Threadless team understood that they were catering to a fun, creative audience. The company showcased user-generated content as much as possible, from turning T-shirt designs into custom cakes to hosting themed battles. Needless to say, members were happy to promote their designs and bring more people to the site.

Coca-Cola

Coke has survived many ups and downs and remained at the top of the soft drink game for a reason. The company is good at taking people by surprise and spreading messages of goodwill and multiculturalism.

In 2012, the company installed “Happiness Machines” around the world. Customers looking for a cool beverage could get a free coke in exchange for hugging the machine, dancing or performing other antics. In another “Happiness” campaign, Coke set up phone booths in Dubai that allowed workers to call their families using bottle caps instead of money.

More recently, the company used the “Share a Coke” campaign to revive sales across 70 countries. Coke printed bottles with common names on them, so people were inspired to buy them for a friend or relative.

To take the campaign a step further, Coke created a hashtag. The social media element gave people extra incentive to purchase a personalized Coke and share photos online.

Dropbox

Not everyone can shell out money for pricey marketing stunts like the Coca-Cola Company. And that’s okay. Smaller businesses can focus on smaller incentives, such as a discount, gift card, or key product feature.

In its fledgeling days, Dropbox drew massive referral traffic with the promise of free storage space. Dropbox was offering an incredibly useful service at a time when internet users were new to the idea of storing files “in the cloud.”

The company offered 500 MB of extra storage space to new customers and the people who referred them. Customers can continue to earn more space by referring more people, which increases loyalty.

The referral program gave people a compelling reason to choose Dropbox over competitors. Offering more free space also encouraged users to keep all their files in one place, rather than splitting content up between multiple free services.

Casper Mattress Company

When a product is significantly different or more expensive than the industry standard, it takes some imagination to reach customers. Casper broke into the crowded mattress market with a $1000 flagship product by making an irresistible offer. Take a mattress home and sleep on it for 100 days before deciding whether to return it.

Who could walk away from such a tempting offer when it included fast online ordering and home delivery? Providing a long trial period also eliminated the biggest fears about buying a high-end mattress.

Customers had plenty of time to test the mattress for comfort and durability. More importantly, customers had a tangible product in their homes that they could use and show to others.

At the same time, Casper circulated detailed ads and reviews on social media sites. Altogether, the strategy generated substantial buzz that helped the company carve a niche in a competitive arena.

How to Take Advantage of Word of Mouth to Grow Your Business Revenue

Here are some ways to make word-of-mouth recommendations work for you.

1. Give away branded items

Branded items serve two major purposes: they are a subtle way of putting your brand in physical spaces and building recognition, of course, but they are also effective reminders. Everybody loves free stuff, and the regular presence of your branding increases the likelihood that your satisfied customer brings your business up in conversation.

“We give customers nice branded items that they are likely to carry around like a Yeti tumbler, which is a great conversation starter and/or reminder,” said Shawn Breyer, owner of Breyer Home Buyers.

At the very least, circulating branded items starts to build general recognition of your business in public and, at best, starts a conversation that leads to more sales.

2. Implement a referral rewards programs

Naturally, people are more likely to offer recommendations if they’re getting something in return. Offering a reward, whether it’s cash, a discount or even something as simple as a raffle entry, can incentivize satisfied customers to recommend your business when they might have otherwise forgotten.

“[We] offer people a $1,000 referral fee if they recommend someone to us and we buy their house from them,” Breyer said. “We have a follow-up campaign to keep this in their mind in case they happen to come across a friend or relative that needs to sell.”

Of course, your reward doesn’t have to be cold, hard cash. Consider offering a discount to the referrer and the person they referred, thereby encouraging word-of-mouth recommendations as well as follow-through on the referred individual’s part.

3. Capture customer recommendations digitally

Although word-of-mouth recommendations aren’t digital, that doesn’t mean you can’t capture them and turn them into a pillar of your digital marketing strategy. If a customer offers positive feedback or refers new business your way, ask them if they would write an online review.

“Whether it be broad ratings and review sites like Facebook or Google, … industry-centric sites like Yelp or Angie’s List, or … a service like TrustPilot, the goal is to build word-of-mouth into public, accessible proof-points,” said Eric Quanstrom, CMO at Cience. “There are few elements of trust so powerful as seeing plenty of reviews for an SMB.”

Once you’ve captured some reviews, Quanstrom added, consider tying them into your referral rewards and customer loyalty programs for an added impact.

4. Send personalized follow-ups

As a small business, one of your greatest advantages is being personal and relatable. Large companies can’t interact with customers the same way a small business can, even in the day and age of live chats and automated email marketing. Leveraging your close connection to the customer to personally thank them for their patronage or send a small gift could go a long way to starting a conversation.

“Remember, [small businesses] can do things that larger enterprises rarely can scale … like sending hand-written thank-you [letters], or small tokens of appreciation, and incorporating individual customer’s feedback,” said Zach Messler, a small business messaging and positioning advisor.

5. Simply ask

Satisfied customers are often willing to spread the word if you just ask. Consider requesting a testimonial that you can use on your website and social media, or send follow-ups to customers asking for feedback and, if they’re satisfied, to spread the word or write a short review.

“Send an email from the president or CEO thanking them for their patronage and requesting that if they were satisfied, they leave a review on a particular site,” said Laura Troyani, founder and principal of B2B marketing company PlanBeyond. “The key to making this work is repetition. The entire process is a numbers game, meaning you have to cast a wide net and ask a lot of customers to get just one review.”

Is Word of Mouth The Best Form of Marketing?

People often wonder whether word of mouth is better than advertising. The answer? Yes. But not always.

A great deal of research like some mentioned above finds that word of mouth is more effective than other types of marketing. Whether compared to traditional advertising, media mentions, or promotional events, word of mouth is more useful in creating new users and customers.

Indeed, McKinsey suggests that “word of mouth generates more than twice the sales of paid advertising in categories as diverse as skincare and mobile phones.”

Why is word of mouth more effective? Two main reasons.

1) Trust

Not surprisingly, we trust our friends more than we trust ads. Ads always say the product is great. “Nine out of ten dentists prefer new Shiny White toothpaste.” “Critics agree that Blastoids 7 is the best movie of 2013.” But because ads always say the product is wonderful, we tend not to believe them.

Our friends, however, will tell it to us straight. They’ll tell us if the product is good, or bad, and as a result we’re more likely to believe their recommendation.

2) Better Targeting

Word of mouth is also more targeted. Say your company sells golf clubs. To target your message at potential customers, you might advertise in a golf magazine. But while some of the magazine’s readers might be in the market for clubs, many may not be. So in the end, some of the ad dollars are wasted.

Word of mouth is much more focused. No one’s going to talk to you about a great baby clothes website if you don’t have a baby. People only tell you about things that they think are at least somewhat relevant to your interests.

Word of mouth is like a searchlight that goes through a social network, finding the most interested receivers for a given piece of information.

So, with all the advantages mentioned above, does it mean word of mouth is better?

Well, not really.

First, it’s slower. Think of a long line of people playing a game of telephone. Social media and online communication have definitely sped the diffusion of information. But word of mouth still moves from person to person, sequentially, so it takes time to spread.

The first person tells the second person something, who tells the third person, etc. It takes a while for information to go from one end of the line to the other.

Advertising, however, tends to be more simultaneous. It’s like a broadcast that reaches everyone in line at once. It is less persuasive than word of mouth, sure, but if the goal is to quickly increase broad awareness, advertising can be a better way to go.

Second, the effectiveness of word of mouth depends on getting people to talk. Word of mouthcan be highly effective, but whether it is or not depends on whether people actually spread the word. It’s not enough just to be on social media or post things once in a while.

To get people to talk about you, your business, or your idea, you need to understand why people talk and share in the first place. How to make yourself part of the conversation.

Advertising and word of mouth can also work together. Ads remind people about the brand which encourages them to talk about it. Someone hears about a product from a colleague and then sees an ad which seals the deal. The two can act as complements rather than as substitutes.

So which is better, word of mouth or advertising? It depends on a number of factors.

How do You Promote You Business on Word of Mouth?

Because your potential customers are overwhelmed by thousands of marketing messages a day (many of them outrageous), they’re desperate to find someone to trust.

That explains why a staggering 92 percent of people rely on their family, friends, and colleagues to help them. Word of mouth is even more important for small businesses because 85 percent of their customers discover them that way.

Most of us would love to have more word-of-mouth marketing, but we aren’t sure how to get it. We assume that it’s entirely an organic process that happens on its own.

This does – and will – happen for you if you do a great job. But there are things you can do to encourage word of mouth. You can’t grow a tomato plant yourself, but you can water it, fertilize it, and make sure it gets enough sun.

Let’s talk about how.

Here are five easy ways you can drive word-of-mouth marketing for your own business.

1. Focus on Delivering an Incredible Customer Experience

Every day, your customers are having average experiences at the grocery store, the salon, and the coffee shop. They’re desperate to find a business experience that stands out!

You can deliver this – if you’re willing to make the customer experience foundational in your business. A great product or service is necessary, but not sufficient. But when you pair a great product with a great experience? That gets people talking.

Go beyond whether your customers are getting a good value for their money. Analyze every aspect of your interactions. Are customers greeted by smiling employees in a comfortable (and spotless) store? Is doing business with you convenient? Does it make people feel special?

The little things make a huge difference. My local jeweler (where my wife and I bought our wedding rings) always greets us with a smile and a cold sparkling water. He cleans our jewelry for free. In addition to being super knowledgeable in his trade, it’s those little things that have driven me to recommend him to half a dozen friends.

Don’t know how to improve the customer experience?

That’s okay; just ask. Collecting feedback as a regular part of your process will make customers feel valued. It will offer insights you never would have thought of on your own.

Imagine sending a handwritten thank-you note to a new customer. She sees it in the mail when she gets home from work. And when her friend comes over for dinner, she spots it on the kitchen table. They get talking and voila. That’s the power of word of mouth.

2. Ask

Some people will be so thrilled about doing business with you that they’ll spread the word on their own. But many others would be willing to do so – if you gave them a little nudge.

All it takes is to ask.

“I’m so pleased you had a great experience! Let me know if I can ever help you with anything else, and if you have any family, friends, or colleagues who need help with (the problem you solve), please let them know about my business. I’d really appreciate it.”

This is technically referral marketing, a subset of word of mouth. But it’s amazing how many small businesses forget to do this.

Different people have different philosophies about when you should do this. My personal preference is to do so at a “high point” in your interactions, once you’ve settled payment and the customer thanks you for your help. That phrase above landed me my second-largest client. All I had to do was ask.

So why not give it a try?

The worst thing someone can do is say “no.”

3. Use Valuable Incentives to Get Customers Talking

Some customers will tell their network about you on their own. Even more will do it once you ask. But if you really want to get your word of mouth going, offer a valuable incentive to spread the word.

An incentive shows customers just how much you appreciate their recommendation. By offering more than just your gratitude, you fertilize the soil for your word-of-mouth marketing plant to grow wild.

What you choose for your incentive is only limited by your imagination. Some of the more popular ones are:

• Cash
• Discounts on future business (for the advocate, new referral, or both)
• Exclusive access to upgrades or new products
• Gift cards (even if they aren’t meant for your business)
• Store credit
• Swag (t-shirts, coffee mugs, tote bags, USB drives, etc.)

These incentives require your time, money, or both. But they are some of the best investments you can make because of the incredible power of word-of-mouth marketing. Remember, the people who receive the referrals are much more likely to buy because they already know and trust their referral source.

4. Streamline the Referral Process

How many people have had a great experience with your business, meant to spread the word about you, but ultimately got busy and forgot?

It’s impossible to say, but I’d wager it’s a significant number. Lots of missed opportunities.

Let’s tackle this from the customer’s perspective. We have to assume they’re busy, stressed, and completely overwhelmed. How can we encourage them to spread the good news about your business?

By making the referral process as simple as possible. And capitalizing while you’re still top of mind, before they get overwhelmed again and forget about you.

One way that can work is to pre-print referral cards and give them to customers when they leave your store. These cards are easy to share, and they have all the contact information needed for the referral recipient to take the next step. An incentive (see step three) can make the sharing compelling.

Technology can also help. You can use tools like Wufoo to create a referral form online, then link to it in your receipt and/or thank-you emails to happy customers. This gives customers the chance to handle referrals now instead of later, when they’re likely to forget.

5. Decide to Always Stay Proactive

Some small businesses see word of mouth as a completely organic phenomenon. So, they ignore it.

We can’t afford to do this, though, because word-of-mouth marketing works both ways. News of negative experiences ripples through your community just as fast as positive ones. Often even faster.

This happens online too. The popularity of dedicated review sites like Yelp (or sites that feature reviews, like Facebook and Google) give every customer a massive platform to share their experience.

You can’t make a negative review disappear, but you can do your best to always address them. You can reply to customers directly and rectify the issue – or offer their money back. This approach can show the people reading the sites (a whopping 81 percent of potential customers) that you’re at least trying to fix things. No one is perfect; people appreciate the effort.

Just as you can salvage negative reviews, you can reward positive ones. Thank them on the review sites. If you can, email them and offer them discounts or other incentives for future business. Make them feel special for going out of their way to talk about you.

We can’t just let word of mouth grow like an untended weed. We must get proactive about it, and firmly weave that into our company culture. Don’t just let your employees see you putting out fires. Set an example by being proactive about improvement.

6. Give Your Customers Something to Talk About

We live in a time of extraordinary innovation. New virtual communities and marketing channels pop up all the time, and we can drive ourselves crazy trying to keep up with every one of them.

Plenty of those channels can work well. But we can’t afford to overlook the oldest strategy in the small business marketing playbook: word of mouth.

Word of Mouth Marketing Definition

Word-of-mouth marketing (WOM marketing) is when a consumer’s interest in a company’s product or service is reflected in their daily dialogues. Essentially, is it is free advertising triggered by customer experiences—and usually, something that goes beyond what they expected.

Word-of-mouth marketing can be encouraged through different publicity activities set up by companies, or by having opportunities to encourage consumer-to-consumer and consumer-to-marketer communications. Also referred to as “WOMM” or “word-of-mouth advertising,” WOM marketing includes buzz, viral, blog, emotional, and social media marketing.

Word of Mouth Marketing Examples

Check out how top brands get customers talking with these brilliant word-of-mouth marketing examples.

Pinterest

Pinterest thrives on user-generated content. The company depends on users to create vision boards and actively recruit more “pinners” into the fold. So, how did Pinterest go from 3000 followers in early 2010 to over 200 million in 2018?

Founder Ben Silbermann turned to the site’s small, but passionate, audience to plan a growth campaign. The site’s loyal group of users really loved the product, so Silbermann organized meetups with them to get feedback. Connecting one-on-one showed users the Pinterest team was serious about building a better site and a bigger community.

Pinterest used this gateway to run one of the most successful referral programs of all time. The “Pin It Forward” campaign encouraged users to create pinboards and invite their friends to do the same. Striking visuals provided inspiration for people to join and offered a preview of exciting projects they could try.

Threadless

Growing a community is an invaluable way to gain insight about your audience while grooming brand advocates. T-shirt company Threadless did just that by gathering graphic designers and art fans to create, share, and buy custom products.

The company attracted 10,000 members in its first two years and earned $6.5 million in under four years. The company engaged fans with ongoing contests and challenges that helped designers gain notoriety and sharpen their skills.

The Threadless team understood that they were catering to a fun, creative audience. The company showcased user-generated content as much as possible, from turning T-shirt designs into custom cakes to hosting themed battles. Needless to say, members were happy to promote their designs and bring more people to the site.

Coca-Cola

Coke has survived many ups and downs and remained at the top of the soft drink game for a reason. The company is good at taking people by surprise and spreading messages of goodwill and multiculturalism.

In 2012, the company installed “Happiness Machines” around the world. Customers looking for a cool beverage could get a free coke in exchange for hugging the machine, dancing or performing other antics. In another “Happiness” campaign, Coke set up phone booths in Dubai that allowed workers to call their families using bottle caps instead of money.

More recently, the company used the “Share a Coke” campaign to revive sales across 70 countries. Coke printed bottles with common names on them, so people were inspired to buy them for a friend or relative. To take the campaign a step further, Coke created a hashtag. The social media element gave people extra incentive to purchase a personalized Coke and share photos online.

Dropbox

Not everyone can shell out money for pricey marketing stunts like the Coca-Cola Company. And that’s okay. Smaller businesses can focus on smaller incentives, such as a discount, gift card, or key product feature.

In its fledgeling days, Dropbox drew massive referral traffic with the promise of free storage space. Dropbox was offering an incredibly useful service at a time when internet users were new to the idea of storing files “in the cloud.”

The company offered 500 MB of extra storage space to new customers and the people who referred them. Customers can continue to earn more space by referring more people, which increases loyalty.

The referral program gave people a compelling reason to choose Dropbox over competitors. Offering more free space also encouraged users to keep all their files in one place, rather than splitting content up between multiple free services.

Casper Mattress Company

When a product is significantly different or more expensive than the industry standard, it takes some imagination to reach customers. Casper broke into the crowded mattress market with a $1000 flagship product by making an irresistible offer. Take a mattress home and sleep on it for 100 days before deciding whether to return it.

Who could walk away from such a tempting offer when it included fast online ordering and home delivery? Providing a long trial period also eliminated the biggest fears about buying a high-end mattress.

Customers had plenty of time to test the mattress for comfort and durability. More importantly, customers had a tangible product in their homes that they could use and show to others.

At the same time, Casper circulated detailed ads and reviews on social media sites. Altogether, the strategy generated substantial buzz that helped the company carve a niche in a competitive arena.

Word of Mouth Marketing Statistics

To understand how powerful word-of-mouth marketing really is, we’ve created a list of word-of-mouth marketing statistics for you.

1. 23% of people talk about their favorite products with friends and family every day. 
2. Furthermore, 78% of people rave about their favorite recent experiences to people they know at least once per week. 
3. 90% of people are much more likely to trust a recommended brand (even from strangers). 
4. 88% of people had the highest level of trust in a brand when a friend or family member recommended it. 
5. Out of the top five popular ways to recommend a business, word-of-mouth comes first, followed by Facebook, Google, and Twitter. 
6. 26% of people will completely avoid a brand if their friend or family tells a negative story about their experience. 
7. 21% of people will lose trust in a brand, whether they’ve been a customer or not, because of bad word-of-mouth. 
8. On average, word-of-mouth drives $6 trillion in annual global spending and is responsible for 13% of all sales.
9. Word-of-mouth is even more effective than paid ads, resulting in five times more sales. 
10. 28% of people say that word-of-mouth increases brand affinity (a customer’s common values with a brand).
11. 64% of marketers agree that word-of-mouth is the most effective form of marketing.
12. 70% of marketers are looking to increase their online word-of-mouth spending, while 29% off-line.
13. Most marketers (83%) use word-of-mouth marketing because it increases brand awareness.  
14. 43% of marketers use word-of-mouth marketing to increase sales.

Word of Mouth Advertising

Word-of-mouth advertising is important for every business, as each happy customer can steer dozens of new ones your way. And it’s one of the most credible forms of advertising because a person puts their reputation on the line every time they make a recommendation and that person has nothing to gain but the appreciation of those who are listening.

To put it most simply, word of mouth marketers and advertisers seek to create something worth talking about and then actively encourage people to talk about it.

People love referrals and they tend to trust the opinions of their friends when making purchasing decisions. Word of mouth advertising is essentially seeking to kickstart an exponential referral chain that drives continuous traffic, leads, and sales for the brand.

Word of Mouth Marketing Strategy

An easy way to encourage word-of-mouth discussion is through marketing strategies that pick up on the social currency factor, offering insider secrets or exclusive information (ex. secret menus). Triggers are a natural social mechanism that reminds us about a brand or product even when we don’t see advertising.

For example, imagine your friend told you about a special happy hour deal on Tuesdays at a bar near your house. On Tuesday, when another friend mentions grabbing drinks after work, you will be triggered to remember the place you heard about with Tuesday specials.

Tuesday becomes the trigger amplifying the effect of WOMM. In this way, word of mouth can also be a way to improve existing customer engagement strategies.

How To Build a Word of Mouth Marketing Strategy

Successful implementation of word-of-mouth campaigns can’t be accomplished via cookie-cutter tactics. There is an inherently creative element to the process that must be artfully and uniquely applied to each brand.

Word of mouth promotion tends to incorporate two key components:

1. Create something buzz-worthy
2. Encourage the buzz

In other words, word of mouth promotion doesn’t simply attempt to get people excited about a business’ logistics, daily operations, or profit model.

The key to a successful word of mouth marketing strategy is to either identify something about a brand that can generate organic buzz OR create something that will generate that buzz.

To find out how to do this effectively, look to successful word of mouth marketing examples for inspiration.

Benefits of Word of Mouth Marketing

It’s Free

One of the biggest benefits of WOMM is that in its most basic sense, it’s free advertising – a consumer talking to a consumer about a product doesn’t cost the business a dime. However, for truly successful WOMM to occur, a comprehensive strategy is often employed to kickstart conversations.

This strategy often includes a content marketing strategy, SEO strategy, ad campaign, and more to increase WOMM frequency and control what it is consumers are talking about.

Word-of-Mouth Recommendations are More Highly Valued

The second biggest benefit of WOMM is that, unlike paid advertising, recommendations about a product that are made via word-of-mouth are much more highly valued.

In a 2013 report published by Nielsen, it was discovered that WOMM “recommendations from friends and family, often referred to as earned advertising, are still the most influential” type of recommendations/advertising.

What’s more, 84 percent of consumers stated that they believed information from friends and family about a product to be the most trusted source of information.

In other words, if a business can employ a great WOMM campaign, then it’s more likely that the business will see an influx in consumers, leads and conversions, and profits.

It Keeps on Going, and Going…

Unlike other marketing strategies that require continuous time, money, and work to further and maintain, word-of-mouth marketing is a self-sustaining marketing approach that offers a long-term value. Those who love a business or product are bound to talk about that business and product, and to keep talking about the business or product as long as they continue to remain customers.

And because those customer talk to other potential customers who then talk to other potential customers, the effects of WOMM are slow to fade. For a business, this means a marketing strategy that isn’t just low-cost and highly valued, but also one that creates a very important long-term relationship with customers, too.

A WOMM Campaign is Easy to Start

For those who are hoping to implement a WOMM campaign that will make a mark, doing so can be relatively easy in comparison to other types of marketing campaigns.

Because word-of-mouth is all about getting consumers to talk to one another, the beginnings of a WOMM campaign can be as significant as a million-dollar advertising campaign, or as simple as a Tweet or a post on another social media network. When thinking about beginning a WOMM campaign, engaging the consumer is the most important part.

Word-of-mouth marketing is an absolute must for businesses today. While the way that consumers talk has changed (online social media sites vs. telephone conversations), the fact that consumers talk about businesses hasn’t.

How Does Word of Mouth Help Businesses?

Here are three reasons word of mouth offers such incredible power:

1. Word of Mouth is Intensely Personal

It’s nearly impossible—even with machine learning—to make an advertisement that’s personally targeted to each and every one of 40,000 potential customers. Yet that’s precisely what your customers can do through word of mouth. They know much more about their friends than you do; let them tell your story in a way that will connect to those friends in ways you cannot.

Even social media fails to achieve that same level of personal touch—it accounts for only half of all word of mouth conversations. Yet, direct spending on social media advertising in the U.S. is expected to increase from $4.3 billion to $23.6 billion in 2019.

While other businesses are busy constantly boosting their paid social budgets, think about how you can instead give your customers something to talk about.

2. Word of Mouth Saves Time

We’ve all been there on a Saturday night: you and your friends want to go out to dinner, but no one wants to take the time to comb through Yelp and research every available option. Instead, your friends shout out their favorite spots or mention a few new locales they’ve heard about from co-workers. Within no time, your group has picked a destination (and you’ve learned about a few new places in the process).

Nearly everyone would choose this sort of organic recommendation.

3. Word of Mouth Capitalizes on Trust

Consumers are more than willing to take a friend’s word for it. While research from Nielsen and Edelman shows that barely half of all consumers trust businesses globally, 83 percent of Americans trust recommendations from friends and family. It’s simple, really.

Friends usually have no financial interest in pushing products or services, so the believability and persuasiveness of the recommendation or referral go up accordingly.

We live during a time in which the algorithms of advertising strategy have become infinitely complex. It’s far too easy to get tied up in those algorithms and forget the fundamentals of business growth. You simply have to get the word out. If your customers are eager to do that for you, you should be doing everything you can to help them.

How Does Word of Mouth Affect Marketing Success?

Consumers trust their friends. This is why word of mouth marketing is the most valuable source of marketing.

According to a Nielsen study, 92% of consumers believe suggestions from friends and family more than they do advertising – this stat alone solidified the word of mouth use case.

WOM also doesn’t stop after just one interaction. One person will tell another, and that person will someone else, then that person will continue the chain and spread the word further, making it a great vehicle for exposure and distribution – if used well.

Of course, the same is true in reverse – negative news can spread just as fast, but the essential benefit of WOM in the connected era is a personal endorsement, which is not only more readily available, but is seen as significantly more valuable to modern consumers.

How Can Word of Mouth be Used to Improve Sales?

Word of mouth has always been an important tool for small businesses because when someone speaks positively about what you sell, it helps build the buyer’s confidence and trust that their purchase won’t be a mistake.

Big businesses often pour millions of dollars into advertising campaigns that imply people are talking about their products. In one Burlington clothing company ad campaign, for instance, consumers bragged about how much money they saved on clothes by shopping at Burlington. And, in a DSW Shoe television ad, one woman ran up to another and asked in awe, “Where did you get those shoes?” The answer: “DSW – It’s where you get those shoes.”  

Small businesses don’t have that kind of money to spend. But savvy marketers are able to generate a buzz and get people talking about their products without spending a fortune on advertising.

Which is More Effective in Marketing Word of Mouth or Advertising?

A great deal of research finds that word of mouth is more effective than other types of marketing. Whether compared to traditional advertising, media mentions, or promotional events, word of mouth is more useful in creating new users and customers.

Indeed, McKinsey suggests that “word of mouth generates more than twice the sales of paid advertising in categories as diverse as skincare and mobile phones.”

Why is word of mouth more effective? Two main reasons.

1. Trust

Not surprisingly, we trust our friends more than we trust ads. Ads always say the product is great. “Nine out of ten dentists prefer new Shiny White toothpaste.” “Critics agree that Blastoids 7 is the best movie of 2013.” But because ads always say the product is wonderful, we tend not to believe them.

Our friends, however, will tell it to us straight. They’ll tell us if the product is good, or bad, and as a result we’re more likely to believe their recommendation.

2. Better Targeting

Word of mouth is also more targeted. Say your company sells golf clubs. To target your message at potential customers, you might advertise in a golf magazine. But while some of the magazine’s readers might be in the market for clubs, many may not be. So in the end, some of the ad dollars are wasted.

Word of mouth is much more focused. No one’s going to talk to you about a great baby clothes website if you don’t have a baby. People only tell you about things that they think are at least somewhat relevant to your interests. Word of mouth is like a searchlight that goes through a social network, finding the most interested receivers for a given piece of information.

So is word of mouth always better?

Well, not quite.

First, it’s slower. Think of a long line of people playing a game of telephone. Social media and online communication have definitely sped the diffusion of information.

But word of mouth still moves from person to person, sequentially, so it takes time to spread. The first person tells the second person something, who tells the third person, etc. It takes a while for information to go from one end of the line to the other.

Advertising, however, tends to be more simultaneous. It’s like a broadcast that reaches everyone in line at once. It is less persuasive than word of mouth, sure, but if the goal is to quickly increase broad awareness, advertising can be a better way to go.

Second, the effectiveness of word of mouth depends on getting people to talk. Word of mouth can be highly effective, but whether it is or not depends on whether people actually spread the word. It’s not enough just to be on social media or post things once in a while.

To get people to talk about you, your business, or your idea, you need to understand why people talk and share in the first place. How to make yourself part of the conversation.

Advertising and word of mouth can also work together. Ads remind people about the brand which encourages them to talk about it. Someone hears about a product from a colleague and then sees an ad which seals the deal. The two can act as complements rather than as substitutes.

So which is better, word of mouth or advertising?

It depends.

Why is Word of Mouth so Powerful?

Let’s talk about what makes this marketing technique work so well.

1. Establishes brand loyalty

When someone is a brand evangelist, they go out of their way to recommend your brand to everyone they can. They love what you bring to the table and believe in your mission. Imagine how powerful it is when someone talks highly of your brand to their friends, family, and followers online. Eventually, those people will favor your brand over others. It creates a domino effect.

That’s the power of word of mouth marketing.

2. Increases brand awareness, sales, and market presence without ad spend

Every business wants to get the best bang for their buck when it comes to budgeting.

According to Bain & Co, it’s estimated that a 5% increase in customer retention can boost a company’s profitability by 75%. How does one increase customer retention? It usually has a lot to do with being transparent about what your brand stands for.

If you can hook customers with your mission, a creative campaign, or a memorable event, you’re golden. Instead of having to spend some of your budgets on placing ads on social media, you can strengthen the relationship you have with your customers. The simple act of replying to their tweets or liking their posts can go a long way.

3. It’s authentic

Now more than ever, people like authenticity.

When a company capitalizes on word of mouth marketing, a community is being created around trust and authenticity rather than pressuring people to buy because it’s what everyone else is doing. It’s much more valuable to foster customer relationships that people that are genuinely interested in your product or service than to advertise to the masses in hopes that you’ll see an increase in sales.

Building a community of dedicated customers works wonders when you launch new products. They’re more likely to buy it just because they already love your brand. Brand evangelists will buy more often, speak highly of your brand, engage with you on social, post about you organically, and in the end, give you a better return on your investment for the time you spent on your strategy.

In short, word of mouth marketing is worth it.

What is Word of Mouth Communication in Marketing?

Word of mouth is the passing of information from person to person using oral communication, which could be as simple as telling someone the time of day. Storytelling is a common form of word-of-mouth communication where one person tells others a story about a real event or something made up.

Oral tradition is cultural material and traditions transmitted by word of mouth through successive generations. Storytelling and oral tradition are forms of word of mouth that play important roles in folklore and mythology.

Another example of oral communication is oral history—the recording, preservation, and interpretation of historical information, based on the personal experiences and opinions of the speaker. Oral history preservation is the field that deals with the care and upkeep of oral history materials collected by word of mouth, whatever format they may be in.

What Word-of-Mouth Techniques Are Effective?

1. Influencer Marketing

If you’re looking for a word of mouth advertising tactic you can have control over, influencer marketing is for you.

With influencer marketing, you’ll need to pay an influencer to feature your products on their social media. Since you’re paying them, you can have some control over what they post, when they post and how they post it.

The best thing about word of mouth advertising is that you can pay to start creating conversations around your product and potentially gain some sales from it.

The downside? It’s not really organic. Having real customers honestly rave about your products is a great feeling. And while you might get excited about getting sales this way, over the long haul this word-of-mouth tactic can get expensive.

2. Hashtag Effect

Hashtags are a subtle but easy way to get your customers to do word of mouth marketing.

And as a result, it ends up making the hashtag more popular. While it can be hard to track whether the sales came from the hashtag or some other channel, this simple tactic helps build stronger brand awareness.

Since the hashtag is the same as your brand name, you’ll be more likely to get found on Instagram. Plus, if your posts are dominating the hashtag feed, you’re more likely to get found. If you’re more likely to get found, you have a better chance of getting more sales.

3. User-Generated Content

As your store grows, customers will start sharing user-generated content. What’s that? It’s content they create. It could be an Instagram post showing them wearing your product or a blog post on their website where they rave about your products.

You can take simple steps to encourage word of mouth by getting customers to create content. How? Post customer photos on your social media or on your product pages. Don’t forget to credit them in the post!

Offer incentives for promoting your brand. Maybe you have a referral or affiliate program where you offer perks or points for various types of content customers create.

Create a contest where you ask customers to send pictures of them with your product for a chance to win a free product or gift card to your store. You can even ask them to get their friends to vote on their post to help them win which can also boost your word of mouth outreach. Be careful with this type of marketing to ensure that it is not perceived as word of mouth advertising by tracking interactions closely.

4. Get Reviews

Reviews work as an effective word of mouth strategy. The customer leaves a product review on the product page for the product they purchased. Then, store visitors end up seeing the post and may become influenced to buy the product based on the reviews they’ve read from real customers.

You can use Shopify apps like Product Reviews Addon to automate the collection of product reviews on your store. The emails are sent directly to your customers for you. If customers leave negative reviews, they’ll be redirected to your customer support team so that you can improve their experience.

5. Create a Referral Program

A referral program can be designed to help you increase the success of your word-of-mouth marketing campaigns. You can offer perks for different levels of promotion. For example, if your customer refers a friend who purchases, you can offer a financial reward as a token of appreciation.

You can also offer non-monetary perks for other levels of promotion such as sharing user-generated content, posting product links on social media, tagging your brand on product posts and more.

You can use Shopify apps like Smile.io and Referral Candy to easily build a referral program on your online store.

How Much of Business is Word of Mouth?

Did you know word of mouth marketing drives $6 trillion of annual consumer spending and is estimated to account for 13% of consumer sales. Word of Mouth marketing impression results 5x more sales than a paid media impression and people are 90% more likely to trust and buy from a brand recommended by a friend.

88% of consumers placed the highest level of trust in word-of-mouth recommendations of from people they know.

Brands that inspire a higher emotional intensity receive 3x as much word of mouth marketing as less emotionally connected brands.

28% of consumers say word of mouth is the most important factor in strengthening or eroding brand affinity.

64% of marketing executives  indicated that they believe word of mouth is the most effective form of marketing.

70% of respondents are planning to increase their online word of mouth marketing spend, and 29% will increase their offline word of mouth marketing spend.

82% of marketers use word-of-mouth marketing to increase their brand awareness, but 43% expect WOMM to improve their direct sales.

How do You Leverage Word of Mouth?

Word-of-mouth may seem purely consequential—you sell great products, so your customers talk about you to their peers. But, marketers can take a more active approach to generate positive buzz. Here are a few tactics to consider.

1. Encourage online reviews.

Before the rise of the Internet, word-of-mouth spread through conversations between friends, family members and colleagues. Now, a person can log into their computer and see hundreds of product reviews. And, these reviews matter! In fact, 72% of customers don’t take action until they have read reviews about a product.

Rather than sit back and hope for positive reviews, marketers can take certain steps to increase the number of reviews their business receives online. Here are a few tips:

• Make it easy: Include a review option on each of your product pages. And, include a call-to-action in your emails to customers so they don’t have to seek out a method to leave reviews on their own.
• Ask at the right time: Ask for customer reviews shortly after they receive their order or product. You want their (hopefully positive) experience to be fresh in their minds so they feel motivated to take the extra time and leave feedback.
• Consider all review channels: From Yelp to Glassdoor to G2 Crowd, there are so many platforms your customers can use to leave reviews. When you send review requests, alternate between these channels so you can generate a more comprehensive collection of reviews across the web.

A quick word of advice, negative reviews can be just as influential as positive ones- how you handle these negative reviews is critical.

2. Leverage user-generated content.

User-generated content (UGC) is content created by your audience, for your audience. UGC is an effective tool to boost word-of-mouth on social media and other digital platforms—as customers trust and engage with content from their peers more than they do with traditional marketing content.

Encourage your customers to create UGC by offering an incentive. For example, contests and giveaways are a fun way to boost engagement among your users. From Instagram posts showcasing your product to video reviews on YouTube, UGC will catch the attention of other users and facilitate organic conversations about your brand.

3. Connect with influencers and thought leaders.

A customer who praises your product to a few online peers won’t spark widespread conversation. An established influencer, on the other hand, can make a massive impact simply by commenting on your brand or product.

The power of influencers speaks to the concept of social currency we discussed earlier. The influencer’s word is more authoritative than the average user’s, so when they recommend a product, their followers perceive that product to be highly valuable.

Remember: an influencer’s total number of followers won’t necessarily indicate the level of word-of-mouth they’ll generate online. Target influencers whose content speaks to the needs and interests of your ideal customers. And, while you might simply pay an influencer to create content, we recommend you partner with influencers who genuinely enjoy using your products. That way, the word-of-mouth they generate will appear more sincere and natural.

An effective influencer marketing strategy requires substantial preparation and research.

4. Establish a referral program.

Customer referrals are the most direct form of word-of-mouth marketing. Referrals transcend casual conversation and involve a customer facilitating a potential deal between your business and a peer.

It’s no secret that referrals are effective—in fact, people are four times more likely to make a purchase when referred by a friend.

But, you can’t simply wait for customers to refer your products to their peers. Instead, develop a referral strategy to motivate and incentivize your customers to give referrals. Here’s what we suggest:

• Identify your most loyal customers: Customers with strong connections to your company are more likely to refer you to their peers. Identify loyal customers based on their purchase history, engagement, and feedback. Then, target these customers first when it comes time to ask for referrals.
• Ask for referrals at the right moment: As with online reviews, you must time your requests for referrals strategically. You might ask for referrals immediately following a closed deal when the customer is most excited about their purchase. Other optimal moments to ask for referrals are immediately following a positive interaction on social media or after a customer submits a positive review of your company.
• Reward customers who give referrals: Provide an incentive to make it worthwhile for customers to refer you to their peers. More than 50% of people say they’re likely to give a referral if offered a direct incentive, social recognition, or access to an exclusive loyalty program.
• Promote your referral program: Don’t just target specific customers for referrals—advertise your referral program across all marketing channels.

Even when referrals don’t result in new customers, they still benefit your company in terms of brand awareness and recognition. Referral programs motivate your loyal customers to spread the word about your business, both online and in their day-to-day lives.

5. Generate buzz on social media.

This final tip might sound obvious but hear us out—to boost word-of-mouth online, you have to give people something to talk about. But as simple as that sounds, generating buzz doesn’t happen by accident. Here are a few ideas to spark more conversation about your company on social media:

• Tease upcoming products: Teaser campaigns give customers a sneak peek at products before they’re released. Teasers build anticipation and curiosity—so when the release date arrives, your audience has already been talking about the product.
• Run a contest: Online contests are a great way to engage with your audience and generate buzz. Not only will your followers jump at the opportunity to win a prize, but they’ll also talk about the contest and potentially get their friends involved. You can even run a contest that facilitates word-of-mouth by requiring contestants to share something about your brand on social media.
• Use branded hashtags: Unique hashtags help to curate the conversation around your company on social media. When someone first discovers your brand, they can immediately find other users with just a click of your hashtag. And, branded hashtags allow you to easily monitor and measure the word-of-mouth surrounding your brand on social media.

Of course, there are many more ways to generate buzz on social media and across all marketing channels. Don’t be afraid to step outside the box and get creative. You never know which unconventional idea will catch on with your audience.

Why is Word of Mouth so Important For Marketers?

Word-of-mouth sharing is absolutely fundamental to who we are as human beings. We can’t help but do it. What does this mean for retailers, entrepreneurs and marketers then? And why should we care about word-of-mouth?

7 reasons:

1: Consumers trust word-of-mouth from friends more than any other sources. If you’re not getting word-of-mouth recommendations for your business, you’re missing out on the single most effective and trusted means of getting new customers.

2: Word-of-mouth is the primary factor behind 20% to 50% of all purchasing decisions. This might sound hard to believe at first. But if you make a list of all the things that you’ve bought, and you evaluate your reasons for buying them, you’ll find that many of them were influenced by the opinions and input of others.

3: Word-of-mouth generates more than 2x the sales of paid advertising. Marketing-induced consumer-to-consumer word-of-mouth generates more than twice the sales of paid advertising in categories as diverse as skincare and mobile phones.

4: Word-of-mouth influences every single stage of the consumer’s journey.

The strongest implication here is that word-of-mouth can be used to tear consumers away from their pre-existing patterns. We’re all interested to hear other people’s experiences about products and services that we’re thinking of buying.

5: Word-of-mouth is the most disruptive to consumer decisions.

A person can do a tremendous amount of research on their own, and have all sorts of ideas about what to buy, where to buy it, and so on – but if a trusted friend tells them a horror story about a bad experience, he would dramatically reconsider his options.

6: Word-of-mouth has far-reaching momentum effects.

This actually suggests that having an edge in word-of-mouth can, over time, allow a business to climb up and over its competitors.

Read Also: Top 19 Best Marketing Tool

Earning quality word-of-mouth is hard work. You’ll have to delight your customers and exceed their expectations. But if you do that, you’ll then get the edge you need to sell more of your product, earn more revenue, hire better people, invest in more R&D.

7: Word-of-mouth has highly variable effects (up to 50x!)

Research shows that a high-impact recommendation – from a trusted friend conveying a relevant message, for example – is up to 50 times more likely to trigger a consumer’s purchase of a product than a low-impact recommendation from a stranger.

Positive word-of-mouth for your business is not only a powerful force of nature that deeply influences consumer decisions, it’s also an incredibly useful indicator that you’re doing something right.

Finally

Word of mouth advertising and marketing can be a monumentally strong player in growing your retail business. But it’s imperative to start with the basics.

It doesn’t matter how many marketing consultants you hire, amazing e-commerce conferences you attend or new age growth hacks you try. If you can’t provide a quality experience for customers and run a tight operation then you’ll fall short somewhere along the way.

Get this right first and then use the strategies in this post to keep multiplying your happy customer base over and over.